The Evolution of Payments

The payments landscape and the way we pay for goods and services has changed dramatically throughout history. While we once bartered with foraged animals, the monetary mediums in play today are a far cry from cattle and other forms of livestock.

Early forms of payment took on physical forms that included cattle, metal, and paper. The emergence of information technology paved the way for electronic forms of payments. And in our digital age, we enjoy the convenience of rapid, electronic payments, such as debit and credit cards and mobile wallets that allow us the freedom to pay for goods and services anywhere, anytime. Finally, for a society living more and more online, the next generation of payments is naturally, the virtual kind. While cryptocurrencies are just emerging and finding its footing, adoption could be exponential, seeing Bitcoin as the default reserve currency in the next 5 years.

Let’s take a look at some milestones in global history that led to where payments are today – and where it’s going.

  • evolution of payments9000-6000 BC: Livestock
    Animals like camels, sheep, and cows are used as barter.
  • 3000 BC: Shekel
    The shekel is used in Mesopotamia to measure a specific weight of barley and would later evolve into an equivalent to silver, bronze, and copper.
  • 1200 BC: Shells
    Found in the Pacific and Indian Oceans, cowrie shells are used in China.
  • 1000-600 BC: Crude metal
    Coins made from base metals are used in China.
  • 700 BC: Precious metal coins
    Gold and silver coins, stamped with various gods and emperors, are used in ancient Lydia (modern-day Turkey).
  • 118 BC: Leather money
    Considered the first documented type of banknote, one square foot pieces of white deerskin with colorful borders are used in China.evolution of payments
  • 806: Paper currency
    Due to a copper shortage, paper banknotes are created in China.
  • 1535: The wampum
    North American Indians use the wampum, a string of beads made from white clam shells. In 1637, the wampum would later be declared legal tender in the United States.
  • 1659: Cheques
    The first cheque appears in Britain.
  • 1816: Gold
    Gold is officially the standard of value in England; banknotes’ worth is now tied directly to gold.
  • 1861: U.S. paper currency
    Due to coin hoarding during the civil war, the US begins creating paper currency bills.
  • 1891: Traveler’s cheques
    American Express issues traveler’s cheques that allowed travelers to pay for items without using cash.
  • 1913: Gold-backed U.S Dollar
    The Federal Reserve System and subsequently gold-banked Federal Reserve notes are established.
  • evolution of payments1918: Electric money
    The Federal Reserve moves currency via telegraph, and electric money is created.
  • 1921: Charge cards
    Department stores, hotel chains, and service stations start providing charge cards to customers so they wouldn’t have to travel back home to get money.
  • 1946: First bank card
    John Biggins, a New York banker, introduces the first bankcard: “Charg-it”.
  • 1950: First credit cards
    Diners Club releases the world’s first universal credit card; it was made of cardboard. Eight years later, American Express and Visa would follow suit.
  • The 1970s: Magnetic stripe
    The magnetic stripe is standardized, allowing transactions to be verified electronically.
  • evolution of payments1978: First debit card
    The first debit card is issued by The First National Bank of Seattle to business executives with large savings accounts.
  • 1979: First credit card terminal and eCommerce introduced
    •   Moving on from the manual imprint machines, Visa introduces the first credit card terminal.
    •   Michael Aldrich introduces the concept of “teleshopping” which would later become online shopping.
  • 1983: RFID
    The patent for RFID is granted to Charles Walton. RFID would later be used to allow drivers to electronically pay tolls on bridges and toll roads without stopping.
  • 1994: EMV and first online purchase
    •   The EMV standard is created.
    •   The first online purchase is made.
  • 1996: E-gold
    The first form of virtual money is founded: e-gold.
  • 1997: First mobile payments and first contactless payment
    •   Coco-Cola introduces the first mobile payment with several vending machines that can accept payments via text message.
    •   ExxonMobil creates Speedpass, the first contactless payment system, allowing consumers to wave the Speedpass to pay for gas at the pump.
    evolution of payments
  • 2003: NFC 
    NFC becomes an approved ISO/IEC standard. NFC would pave the way for mobile wallets to proliferate.
  • 2007: First mobile wallet
    M-PESA creates the first mobile payments system, allowing users to transfer money on their phones.
  • 2009: Bitcoin born
    The first cryptocurrency, bitcoin, emerged.
  • 2011: Mobile payments in Canada
    Payfirma is the first to bring mobile payments to Canada with their mobile card reader.
  • 2016: Friction-free payments
    Companies, like Google and MasterCard, continue to explore technologies in pursuit of friction-free payments.